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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 51-S.F.No. 1069 
                  An act relating to commerce; regulating financial 
                  institution examinations, applications, loans, 
                  advertising, and organizational provisions; revising 
                  the standard nonforfeiture law for individual deferred 
                  annuities; regulating the deposit and investment of 
                  local public funds; making various technical changes; 
                  repealing obsolete rules; amending Minnesota Statutes 
                  2002, sections 46.04, subdivision 1; 46.041, 
                  subdivision 2; 47.015, by adding a subdivision; 
                  47.101, subdivision 2; 47.59, subdivision 2; 47.67; 
                  48.08; 48.24, subdivision 6; 52.06, subdivision 1; 
                  61A.245, subdivisions 3, 4, 5, 6, 12; 118A.03, 
                  subdivisions 2, 3; 300.025; 300.23; 332.29, 
                  subdivision 1; repealing Minnesota Rules, parts 
                  2675.0300; 2675.2250; 2675.6400. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 46.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL.] The commissioner of commerce, 
        referred to in chapters 46 to 59A, and sections 332.12 to 
        332.29, as the commissioner, is vested with all the powers, 
        authority, and privileges which, prior to the enactment of Laws 
        1909, chapter 201, were conferred by law upon the public 
        examiner, and shall take over all duties in relation to state 
        banks, savings banks, trust companies, savings associations, and 
        other financial institutions within the state which, prior to 
        the enactment of chapter 201, were imposed upon the public 
        examiner.  The commissioner of commerce shall exercise a 
        constant supervision, either personally or through the examiners 
        herein provided for, over the books and affairs of all state 
        banks, savings banks, trust companies, savings associations, 
        credit unions, industrial loan and thrift companies, and other 
        financial institutions doing business within this state; and 
        shall, through examiners, examine each financial institution at 
        least once every 18 24 calendar months.  In satisfying this 
        examination requirement, the commissioner may accept reports of 
        examination prepared by a federal agency having comparable 
        supervisory powers and examination procedures.  With the 
        exception of industrial loan and thrift companies which do not 
        have deposit liabilities and licensed regulated lenders, it 
        shall be the principal purpose of these examinations to inspect 
        and verify the assets and liabilities of each and so far 
        investigate the character and value of the assets of each 
        institution as to determine with reasonable certainty that the 
        values are correctly carried on its books.  Assets and 
        liabilities shall be verified in accordance with methods of 
        procedure which the commissioner may determine to be adequate to 
        carry out the intentions of this section.  It shall be the 
        further purpose of these examinations to assess the adequacy of 
        capital protection and the capacity of the institution to meet 
        usual and reasonably anticipated deposit withdrawals and other 
        cash commitments without resorting to excessive borrowing or 
        sale of assets at a significant loss, and to investigate each 
        institution's compliance with applicable laws and rules.  Based 
        on the examination findings, the commissioner shall make a 
        determination as to whether the institution is being operated in 
        a safe and sound manner.  None of the above provisions limits 
        the commissioner in making additional examinations as deemed 
        necessary or advisable.  The commissioner shall investigate the 
        methods of operation and conduct of these institutions and their 
        systems of accounting, to ascertain whether these methods and 
        systems are in accordance with law and sound banking 
        principles.  The commissioner may make requirements as to 
        records as deemed necessary to facilitate the carrying out of 
        the commissioner's duties and to properly protect the public 
        interest.  The commissioner may examine, or cause to be examined 
        by these examiners, on oath, any officer, director, trustee, 
        owner, agent, clerk, customer, or depositor of any financial 
        institution touching the affairs and business thereof, and may 
        issue, or cause to be issued by the examiners, subpoenas, and 
        administer, or cause to be administered by the examiners, 
        oaths.  In case of any refusal to obey any subpoena issued under 
        the commissioner's direction, the refusal may at once be 
        reported to the district court of the district in which the bank 
        or other financial institution is located, and this court shall 
        enforce obedience to these subpoenas in the manner provided by 
        law for enforcing obedience to subpoenas of the court.  In all 
        matters relating to official duties, the commissioner of 
        commerce has the power possessed by courts of law to issue 
        subpoenas and cause them to be served and enforced, and all 
        officers, directors, trustees, and employees of state banks, 
        savings banks, trust companies, savings associations, and other 
        financial institutions within the state, and all persons having 
        dealings with or knowledge of the affairs or methods of these 
        institutions, shall afford reasonable facilities for these 
        examinations, make returns and reports to the commissioner of 
        commerce as the commissioner may require; attend and answer, 
        under oath, the commissioner's lawful inquiries; produce and 
        exhibit any books, accounts, documents, and property as the 
        commissioner may desire to inspect, and in all things aid the 
        commissioner in the performance of duties.  
           Sec. 2.  Minnesota Statutes 2002, section 46.041, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE OF FILING APPLICATION; PUBLICATION.] Upon 
        notice of acceptance of an application as complete in all 
        respects for filing, the applicant shall within 30 days of the 
        receipt of the form prescribed by the commissioner, publish a 
        notice of the filing of the application, in a qualified 
        newspaper published in the municipality in which the proposed 
        bank is to be located, and if there is no such newspaper, then 
        in a qualified newspaper likely to give notice in the 
        municipality in which the bank is proposed to be located.  The 
        notice must be in the form prescribed by the commissioner and, 
        in addition to the publication, the applicant shall mail a copy 
        of the notice by certified mail to every bank located within 
        three miles of the proposed location of the bank. 
           Sec. 3.  Minnesota Statutes 2002, section 47.015, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [PERMISSIVE CLOSING ON DECEMBER 24.] A financial 
        institution may close at noon on December 24 or on December 31.  
        The financial institution shall post on its premises a written 
        notice of the closing. 
           Sec. 4.  Minnesota Statutes 2002, section 47.101, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BANKING INSTITUTIONS; CERTAIN RELOCATIONS, 
        APPLICATIONS, NOTICE, APPROVAL.] A banking institution defined 
        in section 48.01, subdivision 2, desiring to relocate its main 
        office within the lesser of a radius of three miles measured in 
        a straight line or the municipality, as defined in section 
        47.51, in which it is located shall notify the commissioner of 
        commerce in a form prescribed by the commissioner of commerce.  
        The applicant shall publish once in a form prescribed by the 
        commissioner a notice of the relocation in a qualified newspaper 
        published in the municipality where the banking institution is 
        located.  If there are no such newspapers, then notice shall be 
        published in qualified newspapers likely to give notice in the 
        municipality.  The applicant shall cause the notice to be 
        publicly displayed in its lobby and sent by certified mail to 
        all banking institutions within three miles of the proposed 
        location measured in a straight line.  
           Sec. 5.  Minnesota Statutes 2002, section 47.59, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPLICATION.] Extensions of credit or purchases 
        of extensions of credit by financial institutions under sections 
        47.20, 47.21, 47.201, 47.204, 47.58, 47.60, 48.153, 48.185, 
        48.195, 59A.01 to 59A.15, 334.01, 334.011, 334.012, 334.021 
        334.022, 334.06, and 334.061 to 334.19 may, but need not, be 
        made according to those sections in lieu of the authority set 
        forth in this section to the extent those sections authorize the 
        financial institution to make extensions of credit or purchase 
        extensions of credit under those sections.  If a financial 
        institution elects to make an extension of credit or to purchase 
        an extension of credit under those other sections, the extension 
        of credit or the purchase of an extension of credit is subject 
        to those sections and not this section, except this subdivision, 
        and except as expressly provided in those sections.  A financial 
        institution may also charge an organization a rate of interest 
        and any charges agreed to by the organization and may calculate 
        and collect finance and other charges in any manner agreed to by 
        that organization.  Except for extensions of credit a financial 
        institution elects to make under section 334.01, 334.011, 
        334.012, 334.021, 334.06, or 334.061 to 334.19, chapter 334 does 
        not apply to extensions of credit made according to this section 
        or the sections listed in this subdivision.  This subdivision 
        does not authorize a financial institution to extend credit or 
        purchase an extension of credit under any of the sections listed 
        in this subdivision if the financial institution is not 
        authorized to do so under those sections.  A financial 
        institution extending credit under any of the sections listed in 
        this subdivision shall specify in the promissory note, contract, 
        or other loan document the section under which the extension of 
        credit is made. 
           Sec. 6.  Minnesota Statutes 2002, section 47.67, is amended 
        to read: 
           47.67 [ADVERTISING.] 
           No advertisement by a person which relates to an electronic 
        financial terminal may be inaccurate or misleading with respect 
        to such a terminal.  Except with respect to direct mailings by 
        financial institutions to their customers, the advertising of 
        rate of interest paid on accounts in connection with electronic 
        financial terminals is prohibited.  Any advertisement, either on 
        or off the site of an electronic financial terminal, promoting 
        the use or identifying the location of an electronic financial 
        terminal, which identifies any financial institution, group or 
        combination of financial institutions, or third parties as 
        owning or providing for the use of its services is prohibited.  
        The following shall be expressly permitted: 
           (a) a simple directory listing placed at the site of an 
        electronic financial terminal identifying the particular 
        financial institutions using its services; 
           (b) the use of a generic name, either on or off the site of 
        an electronic financial terminal, which does not promote or 
        identify any particular financial institution, group or 
        combination of financial institutions, or any third parties; 
           (c) media advertising or direct mailing of information by a 
        financial institution or retailer identifying locations of 
        electronic financial terminals and promoting their usage; 
           (d) any advertising, whether on or off the site, relating 
        to electronic financial terminals, or the services performed at 
        the electronic financial terminals located on the premises of 
        the main office, or any office or detached facility of any 
        financial institution; 
           (e) a coupon or other promotional advertising that is 
        printed upon the reverse side of the receipt or record of each 
        transaction required under section 47.69, subdivision 6; and 
           (f) promotional advertising displayed on the electronic 
        screen. 
           Sec. 7.  Minnesota Statutes 2002, section 48.08, is amended 
        to read: 
           48.08 [DIRECTORS AND OFFICERS, RESTRICTED USE OF BANK 
        FUNDS; DEALINGS WITH BANK.] 
           No director, officer or employee shall, directly or 
        indirectly, in any manner, use the funds of the bank, or any 
        part thereof, except in its regular business transactions, and 
        every loan made to any of its directors, officers, employees, or 
        agents shall be upon the same security required of others and in 
        strict conformity to its rules and regulations.  Every such 
        loan, or line of credit for a stated amount and not to run for 
        more than one year, shall be authorized in advance by the board 
        and acted upon in the absence of the applicant, except that a 
        loan to a director, officer, or employee for an amount which 
        will not increase such a liability to exceed the greater of (a) 
        $25,000 or (b) five percent of the bank's capital and unimpaired 
        surplus or $500,000, whichever is less, may be made without 
        previous approval but shall be acted upon by the board at the 
        next succeeding regular meeting.  No cashier or other officer or 
        employee of a bank shall sell to the bank, directly or 
        indirectly, any mortgage, bond, note, stock, or other security 
        without the written approval of the board of directors, filed in 
        the office of the bank or embodied in a resolution adopted by 
        the board.  A copy of this written approval or resolution shall 
        immediately be sent to the commissioner of commerce. 
           Sec. 8.  Minnesota Statutes 2002, section 48.24, 
        subdivision 6, is amended to read: 
           Subd. 6.  The discount of the following classes of paper 
        shall not be regarded as creating liability within the meaning 
        of this section: 
           (1) Bonds, orders, warrants, or other evidences of 
        indebtedness of the United States, of federal land banks, of 
        this state or of any county, city, town, hospital district, or 
        school district in this state, or of the bonds, representing 
        general obligation of any other state in the United States, or 
        bonds and obligations of the federal home loan banks established 
        by act of Congress known as the Federal Home Loan Bank Act, 
        approved July 23, 1932, and acts amendatory thereto, or 
        debentures and other obligations of the federal intermediate 
        credit banks established by act of Congress known as the Federal 
        Intermediate Credit Banks Act, approved March 4, 1923, and acts 
        amendatory thereto, in obligations issued by the banks for 
        cooperatives or any of them, and in bonds and obligations of the 
        home owners' loan corporation established by act of Congress, 
        known as the Home Owners' Loan Act of 1933, and acts amendatory 
        thereto, in exchange for mortgages on homes, or contracts for 
        deed, or real estate held by it.  
           (2) Bills of exchange drawn in good faith against actually 
        existing values, including bills which are secured by shipping 
        documents conveying or securing title to goods shipped, and 
        which are not to be surrendered until such bills are paid in 
        cash or solvent credits.  This includes bankers' acceptances or 
        participations in bankers' acceptances of the kind and 
        maturities made eligible by law for rediscount with, or purchase 
        by, federal reserve banks, providing the same are accepted or 
        endorsed by a bank or trust company incorporated under the laws 
        of this state; or by any bank or trust company in the United 
        States which is a member of the Federal Reserve system.  
           (3) Paper based upon the collateral security of warehouse 
        receipts covering agricultural or manufactured products stored 
        in elevators or warehouses under the following conditions: 
           First, when the actual market value of the property covered 
        by such receipts at all times exceeds by at least ten percent 
        the amount loaned thereon, and 
           Second, when the full amount of every such loan is at all 
        times covered by fire insurance in duly authorized companies, 
        within the limit of their ability to cover such amounts, and the 
        excess, if any, in companies having sufficient paid-up capital 
        to authorize their admission, and payable, in case of loss, to 
        the bank or holder of the warehouse receipt.  
           (4) Total loans to an obligor secured by either 
        certificates of deposit, or savings certificates or both, of any 
        such bank to the extent of the total of such certificates 
        pledged as security segregated deposit accounts in the lending 
        bank, provided that a security interest in the deposit has been 
        perfected.  Where the deposit is eligible for withdrawal before 
        the secured loan matures, the bank shall establish internal 
        procedures to prevent release of the deposit without the lending 
        bank's prior consent.  
           (5) Debentures issued under the authority of the federal 
        National Mortgage Association.  
           (6) Obligations representing loans from one business day to 
        the next to any state bank or national banking association of 
        excess reserve balances from time to time maintained under the 
        provisions of section 48.221, or of section 19 of the Federal 
        Reserve Act, as amended, United States Code, title 12, sections 
        461 et seq.  
           Sec. 9.  Minnesota Statutes 2002, section 52.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REPORT AND AUDIT SCHEDULE.] Credit unions 
        shall be under the supervision of the commissioner of commerce.  
        Each credit union shall annually, on or before January 25, file 
        a report with the commissioner of commerce on forms supplied by 
        the commissioner for that purpose giving such relevant 
        information as the commissioner may require concerning the 
        operations during the preceding calendar year.  Additional 
        reports may be required.  Credit unions shall be examined, at 
        least once every 18 24 calendar months, by the commissioner of 
        commerce.  Further, in lieu of this examination the commissioner 
        may accept any examination made by the National Credit Union 
        Administration, provided a copy of the examination is furnished 
        to the commissioner.  A report of the examination by the 
        commissioner of commerce shall be forwarded to the president, or 
        the chair of the board if the position is so designated pursuant 
        to section 52.09, subdivision 4, of the examined credit union 
        within 60 days after completion of the examination.  Within 60 
        days of the receipt of such report, a general meeting of the 
        directors and committees shall be called to consider matters 
        contained in the report.  For failure to file reports when due, 
        unless excused for cause, the credit union shall pay to the 
        state treasurer $5 for each day of its delinquency. 
           Sec. 10.  Minnesota Statutes 2002, section 61A.245, 
        subdivision 3, is amended to read: 
           Subd. 3.  (a) In the case of contracts issued on or after 
        the operative date specified in subdivision 12, no contract of 
        annuity, except as stated in subdivision 2, shall be delivered 
        or issued for delivery in this state unless it contains in 
        substance the following provisions, or corresponding provisions 
        which in the opinion of the commissioner are at least as 
        favorable to the contract holder, upon cessation of payment of 
        considerations under the contract: 
           (a) (1) that upon cessation of payment of considerations 
        under a contract, or upon the written request of the contract 
        owner, the company will shall grant a paid-up annuity benefit on 
        a plan stipulated in the contract of the value specified in 
        subdivisions 5, 6, 7, 8 and 10; 
           (b) (2) if a contract provides for a lump sum settlement at 
        maturity, or at any other time, that upon surrender of the 
        contract at or prior to the commencement of any annuity 
        payments, the company will shall pay in lieu of any paid-up 
        annuity benefit a cash surrender benefit of the amount specified 
        in subdivisions 5, 6, 8 and 10.  The company shall may reserve 
        the right to defer the payment of the cash surrender benefit for 
        a period of not to exceed six months after demand therefor with 
        surrender of the contract after making a written request and 
        receiving written approval of the commissioner.  The request 
        must address the necessity and equitability to all contract 
        holders of the deferral; 
           (c) (3) a statement of the mortality table, if any, and 
        interest rates used in calculating any minimum paid-up annuity, 
        cash surrender or death benefits that are guaranteed under the 
        contract, together with sufficient information to determine the 
        amounts of the benefits; and 
           (d) (4) a statement that any paid-up annuity, cash 
        surrender or death benefits that may be available under the 
        contract are not less than the minimum benefits required by any 
        statute of the state in which the contract is delivered and an 
        explanation of the manner in which the benefits are altered by 
        the existence of any additional amounts credited by the company 
        to the contract, any indebtedness to the company on the contract 
        or any prior withdrawals from or partial surrenders of the 
        contract. 
           (b) Notwithstanding the requirements of this section 
        subdivision, any deferred annuity contract may provide that if 
        no considerations have been received under a contract for a 
        period of two full years and the portion of the paid-up annuity 
        benefit at maturity on the plan stipulated in the contract 
        arising from considerations paid prior to the that period would 
        be less than $20 monthly, the company may at its option 
        terminate the contract by payment in cash of the then present 
        value of the portion of the paid-up annuity benefit, calculated 
        on the basis of the mortality table, if any, and interest rate 
        specified in the contract for determining the paid-up annuity 
        benefit, and by the payment shall be relieved of any further 
        obligation under the contract. 
           Sec. 11.  Minnesota Statutes 2002, section 61A.245, 
        subdivision 4, is amended to read: 
           Subd. 4.  The minimum values as specified in subdivisions 
        5, 6, 7, 8 and 10 of any paid-up annuity, cash surrender or 
        death benefits available under an annuity contract shall be 
        based upon minimum nonforfeiture amounts as defined in this 
        subdivision. 
           (a) With respect to contracts providing for flexible 
        considerations, The minimum nonforfeiture amount at any time at 
        or prior to the commencement of any annuity payments shall be 
        equal to an accumulation up to that time at a rate rates of 
        interest of three percent per annum as indicated in paragraph (b)
        of percentages of the net considerations, as defined in this 
        subdivision, paid prior to that time, decreased by the sum 
        of clauses (1) through (4): 
           (i) (1) any prior withdrawals from or partial surrenders of 
        the contract accumulated at a rate rates of interest of three 
        percent per annum and (ii) as indicated in paragraph (b); 
           (2) an annual contract charge of $50, accumulated at rates 
        of interest as indicated in paragraph (b); 
           (3) any premium tax paid by the company for the contract 
        and not subsequently credited back to the company, such as upon 
        early termination of the contract, in which case this decrease 
        must not be taken, accumulated at rates of interest as indicated 
        in paragraph (b); and 
           (4) the amount of any indebtedness to the company on the 
        contract, including interest due and accrued; and increased by 
        any existing additional amounts credited by the company to the 
        contract. 
           The net considerations for a given contract year used to 
        define the minimum nonforfeiture amount shall be an amount not 
        less than zero and shall be equal to the corresponding 87.5 
        percent of the gross considerations credited to the contract 
        during that contract year less an annual contract charge of $30 
        and less a collection charge of $1.25 per consideration credited 
        to the contract during that contract year.  The percentages of 
        net considerations shall be 65 percent of the net consideration 
        for the first contract year and 87.5 percent of the net 
        considerations for the second and later contract years.  
        Notwithstanding the provisions of the preceding sentence, the 
        percentage shall be 65 percent of the portion of the total net 
        consideration for any renewal contract year which exceeds by not 
        more than two times the sum of those portions of the net 
        considerations in all prior contract years for which the 
        percentage was 65 percent. 
           (b) With respect to contracts providing for fixed scheduled 
        considerations, minimum nonforfeiture amounts shall be 
        calculated on the assumption that considerations are paid 
        annually in advance and shall be defined as for contracts with 
        flexible considerations which are paid annually with two 
        exceptions: 
           (1) the portion of the net consideration for the first 
        contract year to be accumulated shall be the sum of 65 percent 
        of the net consideration for the first contract year plus 22.5 
        percent of the excess of the net consideration for the first 
        contract year over the lesser of the net considerations for the 
        second and third contract years; and 
           (2) the annual contract charge shall be the lesser of (i) 
        $30 or (ii) ten percent of the gross annual consideration. 
           (c) With respect to contracts providing for a single 
        consideration, minimum nonforfeiture amounts shall be defined as 
        for contracts with flexible considerations except that the 
        percentage of net consideration used to determine the minimum 
        nonforfeiture amount shall be equal to 90 percent and the net 
        consideration shall be the gross consideration less a contract 
        charge of $75. 
           (b) The interest rate used in determining minimum 
        nonforfeiture amounts must be an annual rate of interest 
        determined as the lesser of three percent per annum and the 
        following, which must be specified in the contract if the 
        interest rate will be reset: 
           (1) the five-year constant maturity treasury rate reported 
        by the Federal Reserve as of a date, or average over a period, 
        rounded to the nearest 1/20 of one percent, specified in the 
        contract no longer than 15 months prior to the contract issue 
        date or redetermination date under clause (4); 
           (2) reduced by 125 basis points; 
           (3) where the resulting interest rate is not less than one 
        percent; and 
           (4) the interest rate shall apply for an initial period and 
        may be redetermined for additional periods.  The redetermination 
        date, basis, and period, if any, shall be stated in the 
        contract.  The basis is the date or average over a specified 
        period that produces the value of the five-year constant 
        maturity treasury rate to be used at each redetermination date. 
           (c) During the period or term that a contract provides 
        substantive participation in an equity indexed benefit, it may 
        increase the reduction described in clause (2) by up to an 
        additional 100 basis points to reflect the value of the equity 
        index benefit.  The present value at the contract issue date, 
        and at each redetermination date thereafter, of the additional 
        reduction must not exceed the market value of the benefit.  The 
        commissioner may require a demonstration that the present value 
        of the additional reduction does not exceed the market value of 
        the benefit.  Lacking such a demonstration that is acceptable to 
        the commissioner, the commissioner may disallow or limit the 
        additional reduction. 
           Sec. 12.  Minnesota Statutes 2002, section 61A.245, 
        subdivision 5, is amended to read: 
           Subd. 5.  Any paid-up annuity benefit available under a 
        contract shall be such that its present value on the date 
        annuity payments are to commence is at least equal to the 
        minimum nonforfeiture amount on that date.  The present value 
        shall be computed using the mortality table, if any, and the 
        interest rate rates specified in the contract for determining 
        the minimum paid-up annuity benefits guaranteed in the contract. 
           Sec. 13.  Minnesota Statutes 2002, section 61A.245, 
        subdivision 6, is amended to read: 
           Subd. 6.  For contracts which provide cash surrender 
        benefits, the cash surrender benefits available prior to 
        maturity shall not be less than the present value as of the date 
        of surrender of that portion of the maturity value of the 
        paid-up annuity benefit which would be provided under the 
        contract at maturity arising from considerations paid prior to 
        the time of cash surrender reduced by the amount appropriate to 
        reflect any prior withdrawals from or partial surrenders of the 
        contract, the present value being calculated on the basis of an 
        interest rate not more than one percent higher than the interest 
        rate specified in the contract for accumulating the net 
        considerations to determine the maturity value, decreased by the 
        amount of any indebtedness to the company on the contract, 
        including interest due and accrued, and increased by any 
        existing additional amounts credited by the company to the 
        contract. In no event shall any cash surrender benefit be less 
        than the minimum nonforfeiture amount at that time.  The death 
        benefit under the contracts shall be at least equal to the cash 
        surrender benefit. 
           Sec. 14.  Minnesota Statutes 2002, section 61A.245, 
        subdivision 12, is amended to read: 
           Subd. 12.  After August 1, 1978, any company may file with 
        the commissioner a written notice of its election to comply with 
        the provisions of this section after a specified date before 
        August 1, 1980.  After the filing of such notice, then upon the 
        specified date, which shall be considered the operative date of 
        this section for such company, this section shall become 
        operative with respect to annuity contracts thereafter issued by 
        the company.  If a company makes no election, the operative date 
        of this section for the company shall be August 1, 1980. After 
        the effective date of this act, a company may elect to apply its 
        provisions to annuity contracts on a contract form-by-contract 
        form basis before the second anniversary of the effective date 
        of this act.  In this instance, the operative date of this act 
        is the date elected for the contract form.  In all other 
        instances, this act applies to annuity contracts issued by the 
        company after the second anniversary of this act, which then 
        becomes the operative date of the act. 
           Sec. 15.  Minnesota Statutes 2002, section 118A.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [IN LIEU OF SURETY BOND.] The following are the 
        allowable forms of collateral in lieu of a corporate surety bond:
           (1) United States government treasury bills, treasury 
        notes, treasury bonds; 
           (2) issues of United States government agencies and 
        instrumentalities as quoted by a recognized industry quotation 
        service available to the government entity; 
           (3) general obligation securities of any state or local 
        government with taxing powers which is rated "A" or better by a 
        national bond rating service, or revenue obligation securities 
        of any state or local government with taxing powers which is 
        rated "AA" or better by a national bond rating service; 
           (4) unrated general obligation securities of a local 
        government with taxing powers may be pledged as collateral 
        against funds deposited by that same local government entity; 
           (5) irrevocable standby letters of credit issued by Federal 
        Home Loan Banks to a municipality accompanied by written 
        evidence that the bank's public debt is rated "AA" or better by 
        Moody's Investors Service, Inc., or Standard & Poor's 
        Corporation; and 
           (5) (6) time deposits that are fully insured by the Federal 
        Deposit Insurance Corporation. 
           Sec. 16.  Minnesota Statutes 2002, section 118A.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [AMOUNT.] The total amount of the collateral 
        computed at its market value shall be at least ten percent more 
        than the amount on deposit plus accrued interest at the close of 
        the business day, except that where the collateral is 
        irrevocable standby letters of credit issued by Federal Home 
        Loan Banks, the amount of collateral shall be at least equal to 
        the amount on deposit plus accrued interest at the close of the 
        business day.  The financial institution may furnish both a 
        surety bond and collateral aggregating the required amount. 
           Sec. 17.  Minnesota Statutes 2002, section 300.025, is 
        amended to read: 
           300.025 [ORGANIZATION OF FINANCIAL CORPORATIONS.] 
           (a) Three or more persons may form a corporation for any of 
        the purposes specified in section 47.12 by applying to the 
        department of commerce and complying with all applicable 
        organizational requirements and the conditions set out in 
        clauses (1) to (7).  However, no corporation may be formed under 
        this section if it may be formed under the Minnesota Business 
        Corporation Act.  The incorporators must subscribe a certificate 
        specifying: 
           (1) the corporation's name, which must distinguish it from 
        all other corporations authorized to do business in this state, 
        and must contain the word "company," "corporation," "bank," 
        "association," or "incorporated"; 
           (2) the general nature of the corporation's business and 
        its principal place of business; 
           (3) the period of its duration, if limited; 
           (4) the names and places of residence of the incorporators; 
           (5) the board in which the management of the corporation 
        will be vested, the date of the annual meeting at which it will 
        be elected, and the names and addresses of the board members 
        until the first election, a majority of whom must always 
        be either residents of this state or reside within 50 miles of 
        the main office of the financial corporation; 
           (6) the amount of capital stock, if any, how the capital 
        stock is to be paid in, the number of shares into which it is to 
        be divided, and the par value of each share; and, if there is to 
        be more than one class, a description and the terms of issue of 
        each class, and the method of voting on each class; and 
           (7) the highest amount of indebtedness or liability to 
        which the corporation will at any time be subject. 
           The certificate may contain any other lawful provision 
        defining and regulating the powers and business of the 
        corporation, its officers, directors, trustees, members, and 
        stockholders.  However, a corporation subject to section 48.27 
        may show its highest amount of indebtedness to be 30 times the 
        amount of its capital and actual surplus.  
           (b) A person doing business in this state may contest the 
        subsequent registration of a name with the office of the 
        secretary of state as provided in section 5.22. 
           Sec. 18.  Minnesota Statutes 2002, section 300.23, is 
        amended to read: 
           300.23 [VOTING, HOW REGULATED.] 
           Unless otherwise provided in the certificate or bylaws, at 
        every meeting each stockholder or member is entitled to one vote 
        in person, or by proxy made within one year or other time 
        specially limited by law, for each share or other lawful unit of 
        representation held in an individual, corporate, or 
        representative capacity.  No stock may be voted on at an 
        election within 20 days after its transfer on the books of the 
        corporation.  In the case of a banking corporation, the 
        commissioner of commerce may waive the 20-day limitation. 
           Sec. 19.  Minnesota Statutes 2002, section 332.29, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXAMINATION; AUDIT.] The commissioner 
        shall examine the books and records of every licensee hereunder 
        and of any person engaged in the business of debt prorating 
        service as defined in section 332.13 at least once every 18 24 
        calendar months.  The commissioner once during any calendar 
        year, may require the submission of an audit prepared by a 
        certified public accountant of the books and records of each 
        licensee hereunder.  If the licensee has, within one year 
        previous to the commissioner's demand, had an audit prepared for 
        some other purpose, this audit may be submitted to satisfy the 
        requirement of this section.  The commissioner may investigate 
        any complaint concerning violations of sections 332.12 to 332.29 
        and may require the attendance and sworn testimony of witnesses 
        and the production of documents.  
           Sec. 20.  [REPEALER.] 
           Minnesota Rules, parts 2675.0300; 2675.2250; and 2675.6400, 
        are repealed effective the day following final enactment. 
           Sec. 21.  [EFFECTIVE DATES.] 
           Sections 1 to 9 and 15 to 20 are effective the day 
        following final enactment.  Sections 10 to 14 are effective 
        August 1, 2003, and apply to annuity contracts issued on or 
        after that date. 
           Presented to the governor May 13, 2003 
           Signed by the governor May 16, 2003, 3:45 p.m.